On September 10, 2025, the Commodity Futures Trading Commission (CFTC) formally withdrew its October 15, 2024 guidance titled "Commission Guidance Regarding the Listing of Voluntary Carbon Credit Derivative Contracts." Issued under the Biden administration, the guidance was intended to assist designated contract markets (DCMs) in navigating the challenges of listing derivative contracts based on voluntary carbon credits (VCCs), a relatively new and complex asset class. The guidance was designed to steer DCMs toward VCCs that demonstrate integrity in their environmental claims, emphasizing transparency, additionality, permanence, and robust methodologies and verification procedures.
The CFTC states that the withdrawal is based on its determination that existing regulations under the Commodity Exchange Act and Parts 38 and 40 of the CFTC Rules already provide a sufficient framework for evaluating and listing such contracts. The CFTC also notes that the guidance created a disproportionate focus on VCC derivatives, potentially leading to confusion and inconsistent application of its broader regulatory framework.
This move appears consistent with the current administration's deregulatory agenda, which has emphasized reducing agency guidance and streamlining regulatory burdens. However, the withdrawal may introduce greater uncertainty for DCMs attempting to comply with CFTC rules when listing VCC derivatives. Given the inherent complexity and variability of carbon credits—such as differences in project types, credit attributes, and verification standards—the absence of tailored guidance could make compliance more precarious for regulated entities.
DCMs and market participants should monitor further developments and consider reassessing their internal protocols for evaluating environmental commodity derivatives. Please contact us if you would like help assessing the implications of this regulatory change for your operations.
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